Bolivia’s Brazil nut accounts for 74% of global market share

RIO DE JANEIRO, BRAZIL – Sales to the United States, Europe and Asia represent approximately US$240 million a year, with Bolivia accounting for 74% and an annual average of US$178 million, compared to Peru’s 15%, representing US$36 million, and Brazil’s 11%, representing a mere US$26 million.

Paradoxically, this Amazonian fruit, which has not been successfully farmed in other parts of the planet, is known in Brazil under the common name “Brazil nut” (a country where it is also called “Pará nut” to differentiate it from other nuts such as the cashew).

Brazilian forests have been the original source of its international trade for over a century. However, the tree is also found in the Bolivian Amazon and the country is currently its main exporter. What is the reason for this phenomenon?

American economist Salo Vinocur Coslovsky thoroughly researched the global Amazon nut market and answered the question of Bolivia’s dominance over Brazil through a study published in 2014 by the Robert Wagner School of Public Management of New York University, called “How Bolivian Producers Met Strict Food Safety Standards and Dominated the Global Brazil-Nut Market.”

According to Coslovsky, Bolivia began to overtake Brazil in 1998, when the European Common Market imposed a sanitary standard that rejected Brazil nuts with high aflatoxin content. This is a harmful substance which has been eliminated from the Bolivian product, unlike the Brazilian, by means of rigorous quality control by the State and companies.

Bolivia’s exporting capacity was such that it sold to Brazil nuts processed in some 20 manufacturing plants mainly concentrated in the city of Riberalta, Beni; and the most paradoxical aspect: the raw material, consisting of nuts in the shell, also comes from Brazil.

In other words, Brazil is forced to sell its raw Brazil nuts to Bolivia because the European market rejects its production. Brazil nuts processed in Bolivian plants successfully reach Europe, free of aflatoxin.

THE REPORT

In an updated report published last August 6 by the Amazônia 2030 project led by Brazilian environmentalists, the U.S. economist argues that “Bolivia’s dominance is now so extensive that its companies buy raw and shelled Brazil nuts from Brazil at ridiculously low prices, process them and export them to the rest of the world as shelled nuts for much higher prices.”

Furthermore, in his report titled “How Bolivia Dominated the Global Brazil Nut Market,” Coslovsky states that, since 2010, Bolivia has exported between US$1 million and US$2 million worth of shelled Brazil nuts per year to Brazil itself.

The New York University professor noted that in 2001, Bolivia surpassed Brazil in the international market, and that by 2019 the country had full global dominance of the Amazonian Brazil nut based on “an efficient management model in response to a problem, unlike the Brazilian case.”

In 1998, the European Union, the world’s largest purchaser of Brazil nuts, issued a sanitary regulation restricting trade of Brazil nuts containing 20 parts per billion (ppb) of aflatoxins, and since January 1999 the restriction became more severe, prohibiting Brazil nuts with 4 ppb.

“What happened then was that Brazilian companies continued sending contaminated shipments, in collusion with each other and with the different government bodies,” Salo Coslovsky said. “Too many contaminated shipments reached Europe, which led to Europeans inspecting 50% and then 100% of Brazilian shipments instead of only 20% of shipments.”

As a result of this control, Brazil nut shipments from Brazil with high aflatoxin levels were continually rejected by European buyers, who make up over half of the world market. Between 2002 and 2003, the U.S. expert reported in a statistical table that Europe rejected an average of around 50 shipments from Brazil.

Meanwhile, in the same period, rejected shipments from Bolivia never exceeded 5. As a result, Brazil stopped exporting to Europe, leaving the market under the absolute dominance of Bolivia.

THE BOLIVIAN CHESTNUT MIRACLE ACCORDING TO COSLOVSKY

The economist specialist in the field of Public Management explains that, despite having fewer logistical, political and financial resources, Bolivia managed to beat Brazil in the chestnut competition thanks to an efficient public and private management model.

“Bolivian Brazil nut producers have succeeded because they were able to join forces to prioritize their methods and infrastructure, despite intense and ongoing distrust among them,” the economist says, referring to how the Bolivian Brazil nut production chain works.

The North American academic conducted extensive fieldwork in the main production centers of the Amazonian fruit, namely the municipalities of Cobija (Pando) and Riberalta (Beni) in Bolivia, as well as Belém do Pará, Rio Branco and Brasiléia in Brazil.

During his visit, Coslovsky noted that the Bolivian government took the European Union’s 1998 strict sanitary regulations very seriously, demanding that same year that exporters prove negative tests for aflatoxin before being granted an export license, a matter on which the Brazilian government acted at a snail’s pace.

Subsequently, the Riberalta processing plants reactivated their business association, installing a laboratory equipped to detect aflatoxin content in Brazil nuts harvested in the border forests of Bolivia and Brazil.

Prior to this development, the Riberalta processors, “very competitive with each other,” says Coslovsky, sent their loads to be analyzed in laboratories in La Paz, almost 1,000 kilometers away. The analysis certificates in La Paz cost approximately US$380; while at the Riberalta lab an analysis cost US$105. “So they decided to set a rate of US$300, which is much cheaper than what was charged in La Paz anyway,” and thus guaranteed revenues to support their laboratory system.

With these resources, the Riberalta entrepreneurs hired 2 North American consultants from the University of Georgia, a state famous for its peanut production, which is vulnerable to aflatoxin.

“The experts demonstrated that there is no way to prevent the fungus in plantations, which was the Brazilian strategy,” Coslovsky explained. In an alternative experiment, they found that aflatoxin glows when subjected to ultraviolet light, and so reflectors were installed in processing plants, which allowed the separation of contaminated chestnuts from healthy fruits, thus complying with European standards.

However, Coslosvsky recalled that the use of ultraviolet light had already been experimented in Brazil and ran into a high health risk problem for factory workers exposed to this radiation. “In trying to solve a health problem, you end up facing a labor issue,” the economist observed.

Pando and Beni are departments in which the natural wealth of the Amazon region stands out. Brazil nuts are one of the assets contributing to the country’s Gross Domestic Product (GDP), but how much do Bolivians know about it? It is one of the main achievements, but little publicized. It is very important to highlight the great work being done in this market.